The Hindu Business Line : Volvo may outsource components worth $99 m

According to ACMA, more than a third (36 per cent) of Indian auto component exports head for Europe, with North America a close second at 26 per cent.

Mayur N Shah

Mumbai, Sept. 28 Volvo Car Corporation, Sweden, has forecasted outsourcing of components worth $99 million from India this year.

It has joined the bandwagon of various international auto majors such as General Motors Corporation (US) and DaimlerChrysler AG (Germany) which have similar outsourcing programmes for components.

Client list

The Swedish car company, part of the Premier Automotive Group and one of the luxurious brands currently owned by Ford Motor Company, the US, has been outsourcing components from major Tier 1 and Tier 2 companies such as Minda HUF, Visteon, Arvin Meritor, Sundaram Clayton, and Rico Auto, said Mr Paul De Voijs, Managing Director, Volvo Cars India.

Most of these auto majors source critical components from India with engine parts making up for nearly a third of all exports. Other parts such as drive, transmission and steering parts (19 per cent), body and chassis (12 per cent), suspension and braking parts (12 per cent), equipment (10 per cent), electric parts (9 per cent) and other parts (7 per cent) account for the remaining automotive exports.

Export estimates

With demand growing for these automotive parts, the industry is poised to jump from exports of $1.8 billion in 2004-05 to $5.9 billion in 2008-09.

According to the Automotive Component Manufacturers Association of India, more than a third (36 per cent) of Indian auto component exports head for Europe, with North America a close second at 26 per cent.

Volvo has tapped onto the growing automotive industry which is known for its frugal engineering.

The capability of offering quality products at globally competitive prices has led to a CAGR of 20 per cent from 2000-2005. In 2005, the auto components industry was worth over $10 billion, which is expected to nearly double every four years, to $18.7 billion in 2009, and reach $40 billion by 2014.

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